The EUR/USD pair tried to rally during the session on Tuesday, but as you can see failed to do so as we form something along the lines of the shooting star. The 1.35 level has offered far too much resistance, and as a result we think that this market will continue to struggle at this point. The market won't necessarily meltdown though, because you have to keep in mind that the Federal Reserve has chosen to extend the length of its quantitative easing program as opposed to tapering off. That being the case, it's difficult to imagine that the US dollar would continue to climb unless of course there was some type of major economic issue with the global economy.
That being the case, we feel that this market will pull back a bit, and that should be a nice buying opportunity. 1.34 should be supportive, and I do believe that there are a lot of buyers down there willing to step in and support the Euro at that point in time. Remember, the European Union just exited a recession, so of course that favors the Euro, especially considering that the US dollar is in such a tough situation at the moment.
Watch statements from the Federal Reserve members
I believe that this market will be driven by statements from Federal Reserve members, and then of course European Union economic announcements. Beyond that, there probably is a whole lot to do in this market, but I do feel that it is well supported enough below in order to warrant waiting for that pullback in a supportive candle in order to start buying again.
It's going be very difficult to sell at this point, as there have been so many supportive areas below previously that I have a hard time believing that any move to the downside is going to be smooth. Do keep in mind however that we are just now entering the "busy season" for currency traders, and as a result the liquidity is still picking up. Ultimately though, I feel that this market goes higher.
